Overview

• The 56th GST Council meeting began in New Delhi for two days to consider simplifying GST to 5% and 18% slabs with a separate ~40% rate for select luxury and sin goods.
• The Centre’s blueprint proposes shifting about 99% of items from the 12% slab to 5% and roughly 90% of items from 28% to 18%, with higher taxes retained for tobacco, pan masala and premium vehicles.
• Proposals under discussion include exempting health insurance premiums at an estimated annual cost of about ₹10,000 crore and introducing compliance reforms such as pre-filled returns, automated refunds and fixes to inverted duty structures.
• Opposition-ruled states met to demand quantified revenue safeguards and clarity on a replacement for the expiring compensation cess, while Andhra Pradesh publicly backed the rate rationalisation plan.
• Tax treatment of electric vehicles is a key sticking point, with the Centre advocating 5% to promote adoption and a ministerial panel recommending 18% for some EVs; markets and brokerages flag potential winners in FMCG and footwear, pending final decisions and notifications targeted before the festive season.